Thursday, August 7, 2008

Household Debt

The ratio of household debt to GDP spiked up in recent years as investors were lured into borrowing money at artificially low interest rates in order to buy stocks and real estate as a hedge against inflation - in the mistaken belief that the assets would continue to appreciate.

The result was an inevitable asset bubble as demand for real assets exceeded supply. Prices were bid up to the point that asset yields were negligible and expected returns were based primarily on future speculative gains from inflation.

The financial sector, spurred on by soaring profits and fat bonuses, circumvented lax regulatory controls to expand debt to record levels - ignoring prudent banking standards to include borrowers with bad credit histories - again in the mistaken belief that ever-increasing asset prices would save them from defaults.

This is making it even harder for buyers to get loans, however, the Home Seller Assist program, created by John Alexander, is providing people with credit scores as low as 500 a chance to purchase a home and obtain good fixed rates. They loan from $50,000 to $300,000

Not only that, but the Home Seller Assist program allows sellers, agents, builders and investors to make a nice 1% commission on every loan that funds.

You can learn more about that part at

We have a live Home Seller Assist presentation there each Tues and Wed
at noon - Central followed by a Q&A, so attend and bring all your questions.

Larry Potter

No comments: